Securities Law & Instruments

IN THE MATTER OF

THE SECURITIES ACT (ONTARIO)

R.S.O. 1990, c. S.5, AS AMENDED

AND

IN THE MATTER OF

ANDRE EDOUARD BOISVERT

Written Submissions to the Director

pursuant to subsection 26(3) of the Act

Date:
February 25, 2005
 
Director:
Tracey Stern
Senior Legal Counsel, Market Regulation
Capital Markets Branch

Written submissions provided by:

The Applicant:
Andre Edouard Boisvert (Mr. Boisvert)
 
Staff of the Ontario Securities Commission (OSC Staff or Staff):
Christopher Jepson Legal Counsel, Registrant Regulation
Jessica Di Renzo, Registration Officer, Registrant Regulation
Leslie Daiter, Registration Research Officer, Registrant Regulation

Background

The applicant, Andre Edouard Boisvert, applied for registration under the Securities Act (Ontario) (the Act) as a mutual fund dealer sponsored by Clarica Investco Inc. (Clarica) on July 28, 2004. He has been registered as a life insurance agent by the Financial Services Commission of Ontario (FSCO) since February 4, 1998.

Under Item 14 of his application for registration, Mr. Boisvert disclosed that he has two criminal convictions -- Family Disturbance in December, 2001 and Sexual Interference in April, 2003. On September 2, 2004, OSC Staff requested additional information regarding the two convictions by September 16, 2004 and Mr. Boisvert provided the additional information on September 13, 2004. In a letter dated November 8, 2004 (the November 8 letter), OSC Staff advised Mr. Boisvert that Staff was recommending that his application for registration be denied on the basis that his two criminal convictions "raise serious concern about your integrity and trustworthiness and are therefore unsuitable for registration as a securities industry professional." The November 8 letter informed Mr. Boisvert that under subsection 26(3) of the Act, he has a right to be heard before the Director makes a decision by making written or oral submissions to the Director. Mr. Boisvert filed written submissions to the Director on November 18, 2004 (the November 18 letter).

Summary of Mr. Boisvert's Submissions

In the November 18 letter and in a response to OSC Staff submissions dated January 19, 2005, Mr. Boisvert described the circumstances of each conviction and argued that mitigating factors should be considered. He submitted that neither charge was business-related and that the charges were motivated by a desire to "hurt me personally". He argued that he does not pose a public danger and provided a letter from his psychiatrist to support his submission. The letter from Dr. Marcel Roy addresses the issues surrounding the first conviction, but not the second. However, it does support the notion that Mr. Boisvert is not a "quick-tempered and hostile individual".

Mr. Boisvert met the terms imposed by the court in both sentences (12 month conditional discharge and counselling for the first conviction and a 12 month suspended sentence and counselling for the second conviction). He stated that he intends to apply for a pardon in April, 2006.

Mr. Boisvert has been a financial advisor since February, 1998 and has had his insurance registration renewed as recently as 2004 until February 2006. In support of his application, Mr. Boisvert provided a letter from his employer, Mr. Duguay, which stated that Mr. Boisvert does not intend to sell mutual funds, but is required to register as a mutual fund salesperson as a condition of his employment with Clarica. His employer insurance company has not received complaints concerning his conduct with clients. In his letter, Mr. Duguay also provided Mr. Boisvert with a recommendation on a personal level. Mr. Duguay provided a surety for Mr. Boisvert after his arrest in 2001 and allowed Mr. Boisvert to live with him, his wife and two small children for forty-four days.

Summary of OSC Staff Submissions

In a submission dated December 15, 2004, OSC Staff concluded that "Mr. Boisvert is unsuitable for registration and that his proposed registration would be objectionable because of his criminal record..." Staff argue that Mr. Boisvert's convictions, "while not directly related to dealing honestly and in good faith in the context of the securities industry are an indicator of a fundamental lack of integrity."

Staff state that where a conviction has already been entered before an application for registration is filed, it is appropriate to consider only the conviction and not the factual background when determining whether registration of a particular individual is objectionable. In addition, Staff submit that they do not have the competence to assess letters describing mitigating circumstances or supporting the argument that the applicant is not a public danger. Staff submit that examining the factual background goes beyond the Commission's mandate as a securities regulatory authority and would, in effect, retry the matter. However, Staff admit that not all criminal convictions are relevant when determining suitability or necessitate a denial of registration.

Finally, Staff argue that the interpretation of the OSC's investor protection mandate "goes beyond protection of investments". In their view, the fact that registrants are alone with clients leads to the conclusion that criminal convictions such as those of Mr. Boisvert are relevant to the determination of whether someone is suitable for registration. "However remote the prospects of an assault on an investor might be in a given case, the consequences for the victim can be severe and cannot be remedied in the way that lost money can be replaced. For this reason, if no other, Staff is of the opinion that it would be objectionable to register Mr. Boisvert."

Decision

 

Discussion of "Suitability" and "Objectionable"

Subsection 26(1) of the Act states that "Unless it appears to the Director that the applicant is not suitable for registration...or that [it] is objectionable, the Director shall grant [registration]." Section 26(2) provides the Director with the discretionary power to restrict registration by imposing terms and conditions.

The Commission has, over time, articulated the criteria for determining suitability for registration to be integrity, competence, and financial solvency. The concerns in this case relate to integrity, which includes honesty and good faith, particularly when dealing with clients, and compliance with Ontario securities law.

In addition, the Director has the ability to deny the application for registration if the Director is satisfied that the registration is objectionable on public interest grounds. Specifically, this may refer to conduct that, while not directly related to the securities industry, affects the investor confidence in the capital markets and its participants.

 

Registration is Objectionable

I agree that the Director should not re-evaluate or retry the circumstances of the conviction based on the account provided by the applicant (i.e. one side). However, I disagree with Staff's view that only the conviction and not the factual background of the conviction should be examined when determining if the registration of a particular individual is objectionable. Without looking at the factual background, the decision about registration is being made in isolation. It is necessary to look to the facts of the case, the details of the conviction as determined by the court, and any additional documentation (including letters of support) from people knowledgeable in the area to assist in determining whether it would be prejudicial to the public interest, and thus objectionable, to register a person with a criminal conviction.

With respect to Staff's argument that the investor protection mandate goes further than the "protection of investments", I respectfully disagree. The mandate of the Commission is "investor protection" in the context of our role as a securities regulatory authority. It is not the role of the Commission, nor does the Commission have the expertise, to ensure the physical safety of investors.

In fulfilling the Commission's mandate to protect the public interest, there is a need to remove those whose past conduct leads to the conclusion that their future conduct may be detrimental to the integrity of the capital markets. The role of the Commission is to "restrain future conduct that is likely to be prejudicial to the public interest in having capital markets that are fair and efficient. In doing so, the Commission must, of necessity, look to past conduct as a guide as to what we believe a person's future conduct might reasonably be expected to be".{1} This evaluation must be done on a case-by-case basis, and the existence of a criminal conviction, while relevant, should not automatically lead to the conclusion that impugned actions will recur and the applicant is objectionable.

Mr. Boisvert's convictions are unrelated to each other. He did not have a history of violence or sexual impropriety before these convictions. He has been forthcoming about these convictions and has fulfilled all of the conditions imposed in each sentence. He has included in his submissions letters of support from both his psychiatrist and his employer. In my view, in this particular case, Mr. Boisvert's past conduct is not necessarily indicative of what his future conduct might reasonably be. The letter from his psychiatrist supports this view. Therefore, I cannot conclude that his conduct in the future may be detrimental to the integrity of the capital markets. Consequently, I cannot agree that granting registration in this case is objectionable.

 

Suitability

One criterion to consider when evaluating suitability is integrity. Does the fact that Mr. Boisvert has criminal convictions lead us to conclude that he is unable to deal honestly and in good faith, particularly with his clients, and to comply with Ontario securities laws? Staff argue that although his convictions are not directly related to the integrity criterion, they are an indicator of a "fundamental lack of integrity".

In assessing Mr. Boisvert's integrity, all of the facts of the case need to be examined, not just the details of the convictions. Mr. Boisvert has been a registered insurance agent since 1998. In a letter of support for the application, Mr. Boisvert's employer stated that Mr. Boisvert has been responsible for payroll at his company. In addition, none of the audits conducted by the insurance company uncovered any problems with Mr. Boisvert or his work with clients. In his previous job, Mr. Boisvert was a purchasing manager for 25 years. The title implies that he dealt with company money. Even though Mr. Boisvert's convictions may cause one to question his integrity, after examining the other circumstances relevant to this determination, I am satisfied that Mr. Boisvert is suitable to be registered as a mutual fund salesperson.

 

Decision

Based on the submissions filed and the reasons set out above, I grant Mr. Boisvert's request for registration as a mutual fund salesperson. I do not impose terms and conditions on the registration for the same reasons described as above.

Dated:
February 25, 2005
 
Tracey Stern
 

{1} Re Mithras Management Ltd (1990), 13 OSCB 1600.